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Book part
Publication date: 19 September 2014

Venkat Kuppuswamy, George Serafeim and Belén Villalonga

Using a large sample of diversified firms from 38 countries we investigate the influence of several national-level institutional factors or “institutional voids” on the…

Abstract

Using a large sample of diversified firms from 38 countries we investigate the influence of several national-level institutional factors or “institutional voids” on the value of corporate diversification. Specifically, we explore whether the presence of frictions in a country’s capital markets, labor markets, and product markets, affects the excess value of diversified firms. We find that the value of diversified firms relative to their single-segment peers is higher in countries with less-efficient capital and labor markets, but find no evidence that product market efficiency affects the relative value of diversification. These results provide support for the theory of internal capital markets that argues that internal capital allocation would be relatively more beneficial in the presence of frictions in the external capital markets. In addition, the results show that diversification can be beneficial in the presence of frictions in the labor market.

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Article
Publication date: 11 January 2018

Thai Young Kim, Rommert Dekker and Christiaan Heij

The purpose of this paper is to show that intentional demand forecast bias can improve warehouse capacity planning and labour efficiency. It presents an empirical…

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1887

Abstract

Purpose

The purpose of this paper is to show that intentional demand forecast bias can improve warehouse capacity planning and labour efficiency. It presents an empirical methodology to detect and implement forecast bias.

Design/methodology/approach

A forecast model integrates historical demand information and expert forecasts to support active bias management. A non-linear relationship between labour productivity and forecast bias is employed to optimise efficiency. The business analytic methods are illustrated by a case study in a consumer electronics warehouse, supplemented by a survey among 30 warehouses.

Findings

Results indicate that warehouse management systematically over-forecasts order sizes. The case study shows that optimal bias for picking and loading is 30-70 per cent with efficiency gains of 5-10 per cent, whereas the labour-intensive packing stage does not benefit from bias. The survey results confirm productivity effects of forecast bias.

Research limitations/implications

Warehouse managers can apply the methodology in their own situation if they systematically register demand forecasts, actual order sizes and labour productivity per warehouse stage. Application is illustrated for a single warehouse, and studies for alternative product categories and labour processes are of interest.

Practical implications

Intentional forecast bias can lead to smoother workflows in warehouses and thus result in higher labour efficiency. Required data include historical data on demand forecasts, order sizes and labour productivity. Implementation depends on labour hiring strategies and cost structures.

Originality/value

Operational data support evidence-based warehouse labour management. The case study validates earlier conceptual studies based on artificial data.

Details

International Journal of Physical Distribution & Logistics Management, vol. 48 no. 1
Type: Research Article
ISSN: 0960-0035

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Article
Publication date: 15 June 2020

Jian Chu and Junxiong Fang

The purpose of this paper is to empirically investigate the impact of economic policy uncertainty on firms' labor investment decision, which includes labor investment…

Abstract

Purpose

The purpose of this paper is to empirically investigate the impact of economic policy uncertainty on firms' labor investment decision, which includes labor investment level and efficiency, especially human capital allocation.

Design/methodology/approach

This paper uses Economic Policy Uncertainty Index for China and Chinese A-share listed firms in the period 2002–2016 to constructs a sample of 20,779 firm-year observations and applies the methods of pooled OLS regressions to do an empirical study.

Findings

This paper finds that firms' labor investment is negatively correlated with economic policy uncertainty. And firms' labor investment efficiency (and overinvestment in labor) is positively (negatively) correlated with economic policy uncertainty, which is more significant for non-SOEs and firms with less government intervention. Further, the positive relation between economic policy uncertainty and labor investment efficiency is more significant for labor-intensive firms, firms in competitive industry, firms in developed labor market and firms under strong labor law protection. In addition, economic policy uncertainty induces firms to make adjustment on human capital structure and allocate more employees with high human capital, which eventually helps firms achieve higher total factor productivity.

Social implications

The study of this paper indicates that the government needs to consider economic policies' impact on firms when introducing and changing policies and guide firms to improve human capital allocation under different internal and external conditions to finally realize the optimal allocation of social resources.

Originality/value

This paper studies the influence of external economic policy environment on firms' labor investment decision, which lacks adequate attention in the literature and indicates that under economic policy uncertainty, firms actively decrease labor demand and increase labor investment efficiency by optimizing human capital allocation.

Details

China Finance Review International, vol. 11 no. 1
Type: Research Article
ISSN: 2044-1398

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Article
Publication date: 17 September 2019

Jing Yi and Jennifer Ifft

Dairy farms, along with livestock and specialty crop farms, face a tight labor supply and increasing labor costs. To overcome the challenging labor market, farm managers…

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1156

Abstract

Purpose

Dairy farms, along with livestock and specialty crop farms, face a tight labor supply and increasing labor costs. To overcome the challenging labor market, farm managers can increase labor-use efficiency through both human resource and capital investments. However, little is known about the relationship between such investments and farm profitability. The purpose of this paper is to examine the relationship between dairy farm financial performance and labor-use efficiency, as measured by labor productivity (milk sold per worker equivalent); labor costs (hired labor cost per unit of milk sold and hired labor cost per worker); and investment in labor-saving equipment.

Design/methodology/approach

Cluster analysis is applied to partition dairy farms into three performance categories (high/middle/low), based on farms’ rate of return on equity, asset turnover ratios and net dairy income per hundredweight of milk. Next, the annual financial rank is fitted into both random- and farm-level fixed-effects ordered logit and linear models to estimate the relationship between dairy farms’ financial performance and labor-use efficiency. This study also investigates the implications of using a single financial indicator as a measure of financial performance, which is the dominant approach in literature.

Findings

The study finds that greater labor productivity and cost efficiency (as measured by hired labor cost per unit of milk sold) are associated with better farm financial performance. No statistically significant relationship is found between farm financial performance and both hired labor cost per worker and advance milking systems (a proxy of capital investment in labor-saving technology). Future studies would benefit from better measurements of labor-saving technology. This study also demonstrates inconsistency in regression results when individual financial variables are used as a measure of financial performance. The greater labor-use efficiency on high-performing farms may be a combination of hiring more-skilled workers and managerial strategies of reducing unnecessary labor activities. The results emphasize the importance of managerial strategies that improve overall labor-use efficiency, instead of simply minimizing total labor expenses or labor cost per worker.

Originality/value

This study examines the importance of labor productivity and labor cost efficiency for dairy farm management. It also develops a novel approach which brings a more comprehensive financial performance evaluation into regression models. Furthermore, this study explicitly demonstrates the potential for inconsistent results when using individual financial variable as a measure of financial performance, which is the dominant measurement of financial performance in farm management studies.

Details

Agricultural Finance Review, vol. 79 no. 5
Type: Research Article
ISSN: 0002-1466

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Book part
Publication date: 19 December 2012

Hild Marte Bjørnsen and Ashok K. Mishra

The objective of this study is to investigate the simultaneity between farm couples’ decisions on labor allocation and production efficiency. Using an unbalanced panel…

Abstract

The objective of this study is to investigate the simultaneity between farm couples’ decisions on labor allocation and production efficiency. Using an unbalanced panel data set of Norwegian farm households (1989–2008), we estimate off-farm labor supply of married farm couples and farm efficiency in a three-equation system of jointly determined endogenous variables. We address the issue of latent heterogeneity between households. We solve the problem by two-stage OLS and GLS estimation where state dependence is accounted for in the reduced form equations. We compare the results against simpler model specifications where we suppress censoring of off-farm labor hours and endogeneity of regressors, respectively. In the reduced form specification, a considerably large number of parameters are statistically significant. Davidson–McKinnon test of exogeneity confirms that both operator and spouse's off-farm labor supply should be treated as endogenous in estimating farming efficiency. The parameter estimates seem robust across model specifications. Off-farm labor supply of farm operators and spouses is jointly determined. Off-farm work by farm operator and spouses positively affects farming efficiency. Farming efficiency increases with operator's age, farm size, agricultural subsidises, and share of current investment to total farm capital stock.

Details

Essays in Honor of Jerry Hausman
Type: Book
ISBN: 978-1-78190-308-7

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Article
Publication date: 14 June 2011

Vesna Stavrevska

The purpose of the paper was to establish the implications of globalisation for labour markets when efficiency wages create endogenous wage rigidity and to re‐examine the…

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2104

Abstract

Purpose

The purpose of the paper was to establish the implications of globalisation for labour markets when efficiency wages create endogenous wage rigidity and to re‐examine the credibility of the arguments that call for deregulation, more wage flexibility and less social protection in this context.

Design/methodology/approach

The role of efficiency wages is reviewed in the traditional international economics theory, new economic geography and the neo‐Schumpeterian perspective towards international competitiveness.

Findings

First, taking into account endogenous sources of wage rigidity has different implications for employment, inequality, regional growth convergence and the role of the welfare state in the context of international competitiveness, from those derived when assuming them away or taking them as imposed by labour market institutions. Second, policies that would substantially reduce social security or lead to cost‐cuts may have an adverse effect on effort and thus on productivity.

Originality/value

To the author's knowledge, this paper is the only review in the literature that concentrates on efficiency wages applied in international trade.

Details

International Journal of Manpower, vol. 32 no. 3
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 1 February 2004

KAOUTHAR LAJILI

This research paper examines the information content and managerial incentives for labour cost voluntary disclosures for a sample of United States publicly traded…

Abstract

This research paper examines the information content and managerial incentives for labour cost voluntary disclosures for a sample of United States publicly traded companies. We focus on labour productivity and managerial efficiency in labour usage and argue that these human capital indicators could provide valuable information to capital market participants seeking human resource‐type of performance measures and signals. Labour productivity and efficiency indicators are estimated following a production function approach and are included in logistic regressions to help explain and predict labour cost voluntary disclosure decisions. We find that labour productivity and managerial efficiency in labour use indicators are generally different between disclosing and non‐disclosing firms, and that proprietary information costs and political cost proxies are significantly related to labour costs voluntary disclosure, consistent with previous literature. These empirical results corroborate the ‘proprietary information’ hypothesis of voluntary disclosure where the strategic costs of disclosure outweigh the signaling benefit from disclosing human capital information.

Details

Journal of Human Resource Costing & Accounting, vol. 8 no. 2
Type: Research Article
ISSN: 1401-338X

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Article
Publication date: 13 April 2020

Fanning Yuan, Miaohan Tang and Jingke Hong

The objective of this study is to evaluate the overall technical efficiency, labor efficiency, capital efficiency and equipment efficiency of 30 Chinese construction…

Abstract

Purpose

The objective of this study is to evaluate the overall technical efficiency, labor efficiency, capital efficiency and equipment efficiency of 30 Chinese construction sectors to foster sustainable economic growth in the construction industry.

Design/methodology/approach

This study employed the super-efficiency data envelopment analysis (SE-DEA) and artificial neural network model (ANN) to evaluate the industrial performance and improvement potential of the Chinese regional construction sectors from 2000 to 2017.

Findings

Results showed that the overall technical and capital efficiencies displayed relatively stable patterns. Equipment efficiency presented a relatively huge fluctuation during the sample period. Meanwhile, labor, capital and equipment efficiencies could potentially improve in the next five years. A spatial examination of efficiencies implied that the economic level was still a major factor in determining the efficiency performance of the regional construction industry. Beijing, Shanghai and Zhejiang were consistently the leading regions with the best performance in all efficiencies. Shandong and Hubei were critical regions with respect to their large reduction potential of labor, capital and equipment.

Research limitations/implications

The study focused on the regional efficiency performance of the construction industry; however, it failed to further deeply discover the mechanism that captured the regional inefficiency. In addition, sample datasets used to predict might induce the accuracy of prediction results. Qualitative policy implications failed to regress the efficiency performance of the industrial policy variables. These limitations will be discussed in our further researches.

Practical implications

Enhancing the overall performance of the Chinese construction industry should focus on regions located in the western areas. In comparison with labor and capital efficiencies, equipment efficiency should be given priority by eliminating outdated equipment and developing high technology in the construction industry. In addition, the setting of the national reduction responsibility system should be stratified to account for regional variations.

Originality/value

The findings of this study can provide a systematic understanding for the current and future industry performance of the Chinese construction industry, which would help decision makers to customize appropriate strategies to improve the overall industrial performance with the consideration of regional differences.

Details

Engineering, Construction and Architectural Management, vol. 27 no. 7
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 28 July 2020

Pablo de Pedraza, Martin Guzi and Kea Tijdens

Di Tella et al. (2001) show that temporary fluctuations in life satisfaction (LS) are correlated with macroeconomic circumstances such as gross domestic product…

Abstract

Purpose

Di Tella et al. (2001) show that temporary fluctuations in life satisfaction (LS) are correlated with macroeconomic circumstances such as gross domestic product, unemployment and inflation. In this paper, we bring attention to labour market measures from search and matching models (Pissarides 2000).

Design/methodology/approach

Our analysis follows the two-stage estimation strategy used in Di Tella et al. (2001) to explore sectoral unemployment levels, labour market tightness and matching efficiency as LS determinants. In the first stage, we use a large sample of individual data collected from a continuous web survey during the 2007–2014 period in the Netherlands to obtain regression-adjusted measures of LS by quarter and economic sector. In the second-stage, we regress LS measures against the unemployment level, labour market tightness and matching efficiency.

Findings

Our results are threefold. First, the negative link between unemployment and an employee's LS is confirmed at the sectoral level. Second, labour market tightness, measured as the number of vacancies per job-seeker rather than the number of vacancies per unemployed, is shown to be relevant to the LS of workers. Third, labour market matching efficiency affects the LS of workers differently when they are less satisfied with their job and in temporary employment.

Originality/value

No evidence of this relationship has been documented before. Our results give support to government interventions aimed at activating demand for labour, improving the matching of job-seekers to vacant jobs and reducing information frictions by supporting match-making technologies.

Details

International Journal of Manpower, vol. 42 no. 3
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 18 November 2013

Gucheng Li, Zhongchao Feng, Liangzhi You and Lixia Fan

Whether there exists an inverse relationship (IR) between farm size and its efficiency remains a hotly debated question among agricultural economists. In most studies to…

Abstract

Purpose

Whether there exists an inverse relationship (IR) between farm size and its efficiency remains a hotly debated question among agricultural economists. In most studies to date, farm efficiency is measured by land productivity. Thus, the IR actually measures the relationship between farm size and land productivity. The purpose of this paper is to examine and understand the IR from a novel angle by using multiple definitions of farm efficiency indicators like labor productivity, profit ratio, total factor productivity (TFP) and technical efficiency (TE).

Design/methodology/approach

By using the farm-level panel data from Hubei province in China from 1999 to 2003, this paper employs the two-way fixed effect model of panel data and the stochastic frontier analysis of Battese and Coelli model to investigate the relationship between farm size and its production efficiency derived from the multiple definitions of production efficiency indicators including land productivity, labor productivity, profit ratio, TFP and TE.

Findings

The study confirmed the IR between land productivity and farm size, as in many formal studies. However, the relationship between farm size and other agricultural efficiency indicators may be positive, negative or uncorrelated at, depending on how the farm efficiency is defined. Therefore, the paper concluded that the relationship between farm size and its production efficiency is mixed. This paper provides economic explanations for the IR through the comprehensive study using the expansion of agricultural efficiency indicators.

Practical implications

Because different agricultural efficiency indicators have different policy implications for China's future agricultural and land policy, the findings have tremendous policy implications, particularly in terms of the current debate on large or small farm development strategy, the also so-called “go big or small” agricultural strategy. In this sense, the Chinese household responsibility system has played a critical role in its agriculture and will continue to play a critical role in terms of social security and social equality. Any reform to this system should proceed with caution.

Originality/value

While most existing studies only try to explain the IR from the perspective of land productivity, this paper attempts to propose a novel angle to examine the IR by using multiple definitions of agricultural efficiency and hopes to find some new conclusions.

Details

China Agricultural Economic Review, vol. 5 no. 4
Type: Research Article
ISSN: 1756-137X

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